Can Xbox Series X Learn From The Past?

New consoles from both Microsoft and Sony are on schedule to launch in the holiday of 2020. Is there anything Xbox can apply from the past three generations and twenty years of competition against the PlayStation? But first, how did Microsoft get here ?

Microsoft didn’t want to make a venture into console gaming on their own, instead they wanted to partner with Sony to collaborate, using their combined expertise in gaming and technology. Sony, having been recently scorned by Nintendo about partnering, wanted nothing to do with Microsoft. Bill Gates was concerned that gaming consoles would take over as the home PC, endangering their position and felt necessary to enter the market.

Microsoft, with their vast experience in tech, understood what a monumental task it was and didn’t want to produce the Xbox in house. Microsoft courted many different manufactures and pleaded with them to create the Xbox, but no one was interested because they understood the costs associated with the endeavour. After unsuccessfully finding a suitor to build the Xbox, Microsoft took on the project internally and in 2001 launched the DirectX Box which would come to be known commercially as the Xbox.

Round 1

When the original Xbox released, PlayStation was already on its second hardware iteration, the PS2 had been available for a year and it was a smash hit. The PS2 also embraced the emerging technology that was DVD, the first true successor since VHS launched in the seventies. The cost of a DVD player at the time was around the same price as a PlayStation and Sony easily sold a few systems to people who would only use it for the movie functionality.

Releasing almost a full year after the PS2 with the speed that technology was advancing near the crest of the millennium, the Xbox was significantly more powerful. Not only was the console more powerful in almost every category, it also included a hard drive, dolby and ethernet, all features that were built in and all features that were previously unheard of in consoles. It wasn’t all better as the Xbox came with a DVD drive also but for legal reasons with Dolby, required an adapter in the form of an IR blaster and awkwardly small remote to playback at the cost of an extra twenty some dollars.

When the dust settled, Microsoft only shipped around 25 million compared to what would become the gold standard for console success with over 150 million for the PS2.

I think Microsoft learned a few things from its initial console battle including the benefit of having a killer app with Halo: Combat Evolved. System selling launch software is similar to a shooting star in its rarity. There have been few systems that launched with a game that sold consoles but if not for Halo, there is a good chance Microsoft wouldn’t be around today. Xbox did have the issue of software quantity and quality, however, the biggest lessons from this generation, was that power alone isn’t going to be the answer, and launching a console a year after the competition immediately puts you at a disadvantage.

Round 2

When Microsoft launched the original Xbox in 2001, they were already a year behind the PS2, which also had the benefit of creating a library of games over the first year and constantly building on this lead. By the end of its cycle, The PS2 had almost 4000 games compared to around 1000 for the original Xbox.

Microsoft knew it needed a fresh start and launched the 360 just four short years after the original Xbox. Considering that the 360 launched a full year ahead of the PS3, the technical specs were fairly similar, which is quite impressive for Xbox, based on how quickly technology evolved during the early 2000’s.

Microsoft lost plenty of money on the original Xbox but they had no chance, unless they priced it at $299, to compete with the PS2. The Xbox 360 launched at $399, which was more than its predecessor but helped the company lose less early on. Sony launched the PS3 at a staggering $599, which incurred a much greater loss per console than Microsoft did but both of these companies understand that the systems are loss leaders. The major reason the PS3 was priced so high was because it was once again embracing new tech with a Blu-Ray drive. Microsoft, embraced the competition by offering a standalone HD-DVD player, but unfortunately within a few years had lost the battle and BluRay was the only option.

Sadly, Microsoft and the Xbox 360 were not able to outsell the PS3 by the end of the era, though many think it did. A major problem was that the Xbox 360 didn’t have a Blu-ray player which was quickly becoming the new normal. Sony also had the added value with its free online play when compared to the Xbox Live membership that had to be purchased.

Finally, the Xbox 360 was able to close the gap this generation with similar amounts of software with 1200 compared to 1400 for PS3 but it lacked in exclusives, which became very apparent by the end. The PS3 shined with exclusive games with experiences for everyone including franchises like The Last of Us, Uncharted, Demons Souls, God of War: Ascension, Gran Turismo, Heavy Rain, Infamous, Killzone, Little Big Planet, MGS 4, Resistance, and Ratchet and Clank with many any of these franchises having multiple entries on the PS3. Microsoft might not have paid much attention to it at the time due to how close the race was, combined with their venture into the Kinect. Ultimately their focus on the gaming adjacent Kinect and taking the focus off exclusives would be an unwise business decision moving forward.

Round 3

The Xbox One and PS4 shipped 8 years after the release of the Xbox 360, making it one of the longest generations of modern gaming. The recession in 2008 was one of worst the world had ever seen at the time with the economic decline nearing that of the Great Depression of 1929. With North America playing such a vital role in video gaming, developing and rushing new consoles to market didn’t make sense for either company.

Microsoft might have learned the wrong thing with how Sony saw great success with PS2 and PS3 based on their inclusion of the DVD and the BluRay drive by thinking that consumers wanted a unified media experience. Microsoft went all in on this idea and began marketing the Xbox One as the centre of the living room.

For the Xbox One, Microsoft wanted to be everything to everyone that it forgot about being something for someone. The hardcore gamer was forgotten about as Microsoft tried to embrace the living room instead of higher quality games and the casual gamer was abandoned as the price of the Xbox One was twenty five percent higher than the PS4 due to its inclusion of Kinect 2.0. This strategy did not pay off as many felt the Kinect either invaded privacy or didn’t offer gaming experiences that weren’t gimmicky. Microsoft was also championing used games not working on the system. Potential customers were either bothered or confused by Microsofts messaging. First impressions are hard to change as some people still think Xbox can’t play used games or requires Kinect

The other major problem Xbox One had at the beginning of the generation was that it was slightly underpowered compared to the PS4. With the specs similar on both systems, the processing power was clearly mismanaged because early on, graphical comparison videos exposed the Xbox One as the inferior system.

Phil Spencer has acknowledged the Xbox One was in the wrong position on price and power, both major issues that plagued the Xbox One. The other major glaring issue was the lack of exclusive games, that started to become a problem during the 360 era. Microsoft has tried to remedy this by creating two studios and purchasing eight more over the course of the Xbox One, including some high level talent including Mojang, Ninja Theory and Double Fine. Understanding that these studios would take some time before Xbox can see a return on investment, Xbox created GamePass, which is a fantastic service that offers great value for gamers.

Round 4

Essentially, Xbox has lost all three generations to PlayStation. As bad as losing can be, Microsoft did pretty well in its own right every generation and learned valuable lessons along the way. These lessons that can hopefully give Microsoft the edge for the first time in 20 years. With the original Xbox, power means nothing if you don’t have games to take advantage and you can’t release a year after the competition. The Xbox 360 showed Microsoft that being cheaper doesn’t always make the difference as you still need to provide the consumer with added value in exclusive games and services. Finally with Xbox One, Microsoft learned that gamers want exclusive games, and they want the best system for the price. If you are priced higher than the competition then you better have the technology to justify it as the PS3 did with the inclusion of BluRay.

Microsoft learned multiple times with Xbox One that people are happy to pay for a premium product as long as it has quality. The cost of the Xbox Elite Controller was almost triple the standard controller but it was built well and offered premium benefits. Not only did it sell well enough to be considered a success but Microsoft followed it up with the Xbox Elite 2.0. Microsoft also doubled down on the premium theory with the introduction of the Xbox One X. A mid cycle refresh offering that played all the same games a launch Xbox One could, but just offered some premium features that people opted to pay for.

With twenty years of knowledge and quickly approaching holiday 2020 can Microsoft finally take what it has learned and turn the tide this generation with the Xbox Series X?